The Billion-Euro Negotiations on the EU’s Multiannual Financial Framework

By Lea Schiller

959.51 billion in commitments and 908.4 billion in payments – this is how much money the last Multiannual Financial Framework of the European Union (EU) decided on. The Multiannual Financial Framework (MFF) – is the EU’s long-term budget. Covering a period of at least five but usually seven years, its purpose is to help the adaption of the annual budget and set ceilings for the EU’s payments and commitments (meaning, the amount of legal obligations the EU can enter). Subsequently, the MFF also has a big influence on the contributions of member states to the EU, which can make these negotiations a crucial affair especially for the net contributors to the union, which is why the budget is decided on in the European Council by unanimity. 

This month, the EU debated the budget of 2021-2027. After meeting with all leaders of the member states, president of the European Council Charles Michel called for a special summit on the 20th of February. But what he had planned to finish in one summit would go on to be what Polish prime minister Mateusz Morawiecki described as the “most difficult negotiations in history” on the EU budget. 

After Brexit, the EU is left with an up to 75 billion Euro big hole in its contributions, and member states are in disagreement on how to make up for it. Proposed solutions include bigger payments of the net contributors, and less concessions to the net beneficiaries, but not all members are prepared to agree to this. In what has been labeled as the “frugal four”, Austria, Denmark, the Netherlands and Sweden have joined to advocate for a cap on the EU budget at 1 percent of the gross national income. Describing their demands, Austrian chancellor Kurz stated: “We insist on permanent net corrections to prevent excessive budgetary imbalances and achieve a fair, sustainable outcome.”

When the summit closed after two days of negotiations, the member states had failed to agree on a new budget deal. The proposal that stood at the end of the summit was rejected by the majority of member states. And while Dutch Prime Minister Mark Rutte stated the document was “moving in the right direction,” though still insufficient, Portuguese Prime Minister António Costa claimed it to be “bad” and further claimed it would only make things more complicated. With the summit ending without a budget deal and no date yet set for further negotiations, it is difficult to say when the EU will reach a decision. Croatian Prime Minister Andrej Plenković even questioned whether this will happen during his country’s presidency of the Council, which is running out at the end of June.

Photo by Maryna Yazbeck on Unsplash

References

EU budget summit: As it happened (2020, February 22). Politico. Retrieved from: https://www.politico.eu/article/eu-european-union-budget-summit-live-blog-european-council-charles-michel-multiannual-financial-framework/#1279650

Khan, M., Fleming, S. & Brunsden, J. (2020, February 21). EU leaders propose budget compromise at fraught summit. The Financial Times. Retrieved from: https://www.ft.com/content/c3e2ef6e-53ed-11ea-8841-482eed0038b1

Kurz, S., Rutte, M., Frederiksen, M. & Lofven, S. (2020, February 16). The ‘frugal four’ advocate a responsible EU budget. The Financial Times. Retrieved from: https://www.ft.com/content/7faae690-4e65-11ea-95a0-43d18ec715f5

The European Council (2020, February 11). Multiannual financial framework: shaping EU expenditure. Retrieved from: https://www.consilium.europa.eu/en/policies/eu-budgetary-system/multiannual-financial-framework/

The European Council (2019, February 25). Multiannual financial framework for 2014-2020. Retrieved from: https://www.consilium.europa.eu/en/policies/eu-budgetary-system/multiannual-financial-framework/mff-2014-2020/
The European Council (2020, February). Multiannual financial framework for 2021-2027: negotiations. Retrieved from: https://www.consilium.europa.eu/en/policies/eu-budgetary-system/multiannual-financial-framework/mff-negotiations/